STORCK USA, LP v. Farley Candy Co., Inc., 92 C 552.

• Decision Date: 17 March 1993
• Docket Number: No. 92 C 552.,92 C 552.
• Citation: 821 F. Supp. 524
• Parties: STORCK USA, L.P. and August Storck K.G., Plaintiffs, v. FARLEY CANDY COMPANY, INC., Defendant.
• Court: U.S. District Court — Northern District of Illinois

821 F. Supp. 524

STORCK USA, L.P. and August Storck K.G., Plaintiffs, v. FARLEY CANDY COMPANY, INC., Defendant.

No. 92 C 552.

United States District Court, N.D. Illinois, E.D.

March 17, 1993.

COPYRIGHT MATERIAL OMITTED

Larry L. Saret, Joseph F. Schmidt, John T. Gabrielides, Louis Altman, and Diana S. Flynn, Laff, Whitesel, Conte & Saret, Chicago, IL, for plaintiffs/counterdefendants.

David C. Brezina, Thomas E. Smith, James R. Sweeney, Lee, Mann, Smith, McWilliams & Sweeney; James Dominick Adducci, Jeffrey Edward Schiller, Schuyler, Roche & Zwirner, Chicago, IL; Alan S. Cooper, Banner, Birch, McKie & Beckett, Washington, DC; and Anne Marie Burke, Chicago, IL, for defendant/counter-claimant.

RULING ON STORCK'S THIRD MOTION FOR PRELIMINARY INJUNCTION

HOLDERMAN, District Judge:

In two previous opinions issued respectively on January 31, 1992 (Storck I) and July 2, 1992 (Storck II) this court entered a preliminary injunction orders in favor of plaintiffs Storck USA, L.P. and August Storck K.G. ("Storck") regarding the trade dress of its Werther's Original candy and against the trade dress of defendant Farley Candy Company, Inc.'s ("Farley") Butter Toffee candy. (PX 2 and PX 275, respectively.) The facts detailed therein will not be repeated here. After the entry of each injunction order, Farley modified the design of its Butter Toffee trade dress in compliance with each respective order.

Shortly after this court's July 2, 1992 injunction order, Farley began to market its Butter Toffee candy using a bag and packaging bearing a third trade dress design (PX 306-310) which complied with both of the court's injunction orders. Storck, in the fall of 1992, conducted a survey as to possible consumer confusion regarding the trade dress of its Werther's Original (PX 1) and the Farley's Butter Toffee third trade dress design (PX 306). In November 1992 Storck filed its third motion for preliminary injunction. After allowing time for further discovery by the parties, the court in early March 1993 conducted a multi-day hearing as to Storck's motion. Based upon the facts adduced, Storck's motion must be denied.

I. Storck's Likelihood of Success on the Merits.

The Seventh Circuit in Computer Care v. Service Systems Enterprises, Inc., 982 F.2d 1063, 1067-68 (7th Cir.1992) reiterated the essential requirements of a trade dress infringement claim stating:

In order to prove trade dress infringement, the plaintiff must establish that: (1) its trade dress is "inherently distinctive" or has acquired "secondary meaning"; (2) the similarity of the defendant's trade dress to that of the plaintiff creates a "likelihood of confusion" on the part of consumers; and (3) the plaintiff's trade dress is "non-functional"; Roulo v. Russ Berrie & Co., Inc., 886 F.2d 931 at 935; see also Abbott Labs. v. Mead Johnson & Co., 971 F.2d 6 at 20; Schwinn Bicycle Co. v. Ross Bicycles, Inc., 870 F.2d 1176 at 1182-83. The third element, that of "functionality," is actually an affirmative defense on which the defendant bears the burden of proof. Abbott Labs., 971 F.2d at 20; W.T. Rogers Co. v. Keene, 778 F.2d 334, 338 (7th Cir. 1985).

Therefore to demonstrate a better than negligible likelihood of success on the merits Storck must present proof as to each essential element of its trade dress infringement claim and must present proof which has a better than negligible chance of overcoming Farley's evidence supporting Farley's affirmative defense as to the functionality and unprotected nature of the trade dress features for which Storck seeks injunctive relief. To do so Storck had relied primarily on survey evidence. The court will address that evidence.

A. The Survey Evidence.

The results of Storck's survey (PX 369), according to Storck's expert Robert Lavidge's "best estimate" was 21% confusion (26.6% — 5% noise) of those surveyed in the Storck survey. Farley criticizes Storck's survey as not reflecting the marketplace setting and as employing "forced answer" questions. Farley's survey, which Storck criticized as "a reading test," resulted in 7.6% confusion (DX 70) among those surveyed in the Farley survey.

Although the percentage of confusion shown by Storck's most recent survey is substantially less than previous survey results obtained by Storck as to previous Farley's Butter Toffee packaging (PX 275) (13% less than the 34% shown by the survey conducted before Storck II), Storck's survey as to Farley's third trade dress design (hereinafter "Third Bag") if trustworthy, demonstrates sufficient survey confusion to support a finding of likelihood of confusion. See James Burrough, Ltd. v. Sign of the Beefeater, Inc., 540 F.2d 266 (7th Cir.1976). Farley's survey's 7.6% confusion percentage weighs against a finding of likelihood of confusion. See Henri's Food Products, Co. v. Kraft, Inc., 717 F.2d 352 (7th Cir.1983).

The court finds, however, that several factors diminish the significance of the results of Storck's survey as to Farley's Third Bag regarding the issue of the likelihood of confusion as to source. The "forced answer" or "same or different" survey question technique, though approved by the Seventh Circuit in other contexts, see McGraw-Edison Co. v. Walt Disney Productions, 787 F.2d 1163, 1172 (7th Cir.1986), may have enhanced Storck's survey results as to the confusion among the survey participants. The extent of this was not shown. More importantly, however, as discussed in the next section, some of the survey confusion may have resulted from the fact that certain features in the trade dress of Farley's Third Bag are similar to elements of the Werther's Original trade dress which have not been proven to be protected under the Lanham Act. These unprotected trade dress elements contributed to a skewing of the survey results in a way which clouds rather than clarifies the issue of likelihood of confusion as to source among consumers.

B. The Trade Dress at Issue.

The total image of Werther's Original trade dress is distinctive but the trade dress features of Farley's Third Bag which Storck seeks now to enjoin relate to generic, functional, and unprotected elements of Werther's Original trade dress.

Storck has twice succeeded in convincing this court to enjoin Farley as to aspects of its Butter Toffee packaging to eliminate any trade dress features which were confusingly similar to Storck's distinctive Werther's Original trade dress. This court at the hearing raised concerns that the features now on the trade dress of Farley's Third Bag (PX 306) are no longer confusingly similar to the protectible aspects of Werther's Original trade dress. Storck perhaps recognizing this in the latter stages of the hearing proposed language for an injunction order that would enjoin Farley's use of certain elements of its trade dress

in combination with other trade dress elements such that the overall effect of such combination is similar in appearance to the trade dress used by plaintiffs on their Werther's Original candy product.

(Storck's counsel's submission during closing argument quoted verbatim in footnote 1 infra.)

The Seventh Circuit has recognized this concept in certain factual contexts, see e.g., Computer Care v. Service Systems Enterprise, Inc., 982 F.2d 1063, 1069 (7th Cir. 1992), and has upheld injunctions containing broad language, see e.g., Scandia Down Corp. v. Euroquilt Inc., 772 F.2d 1423 (7th Cir.1985). The order sought by Storck,¹ however, forecloses from Farley's use features of the trade dress of Farley's Third Bag which are not elements, either alone or in combination, of Storck's Werther's Original trade dress which were proven to be protectible under the Lanham Act.

The court will initially address the four specific trade dress elements upon which Storck seeks an injunction:

1. The tan background color of Storck's Werther's Original (separate from the distinctive Village Scene and candy mound designs, which were infringed by the trade dress elements the court enjoined Farley from using in Storck I and Storck II, respectively) has not been proven to be protectible. See Nutrasweet v. Stadt Corp., 917 F.2d 1024, 1027-28 (7th Cir.1990). Unlike the cases in which certain colors used on certain products have been accorded protection, see Master Distributors, Inc. v. Pako, 986 F.2d 219 (8th Cir.1993) (blue tape on film); In re Owens-Corning Fiberglass Corp., 774 F.2d 1116 (Fed.Cir.1985) (pink insulation) no secondary meaning as to Werther's Original tan background color has been shown.

2. The gold foil wrapper around each piece of Werther's Original candy, as discussed in Storck II, pages 19-26, is not distinctive, has not acquired secondary meaning and is not protected under the Lanham Act;

3. The two unwrapped candies pictured on Farley's Third Bag (PX 306) are, of course, generic, descriptive and not similar to the mound of unwrapped candy that covers the lower part of the Werther's Original bag (PX 1). The court notes that the actual individual candy pieces of Werther's Original and Farley's Butter Toffee are almost indistinguishable when viewed unwrapped. Storck claims no protection in the shape or size of its Werther's Original candy pieces. The shape and size of both Storck's and Farley's candies are dictated by the molds which make the candy. Thus the candy pieces are generic. The picture of two of Farley's unwrapped, generic candy pieces in its Butter Toffee Third Bag trade dress (PX 306) does not infringe the distinctive mound of unwrapped candy pictured on Storck's Werther's Original trade dress (PX 1). Farley was enjoined in Storck II of displaying a mound of unwrapped candy on its trade dress. Storck (pursuant to its closing argument submission, footnote 1 continued infra page 528, paragraph 3A) seeks to enjoin Farley from displaying a picture of even one unwrapped Farley Butter Toffee candy as part of its trade dress. Neither the facts nor the law support such a result where as here the product is generic and not

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